Source | Business Today
Over four crore subscribers of the Employees Provident Fund Organisation (EPFO) will get 8.65 per cent rate of interest for 2016-17 in their accounts soon.
On Thursday, labour minister Bandaru Dattatreya said the Finance Ministry has approved 8.65 per cent interest rate on EPF.
“Finance Ministry has agreed to 8.65 per cent rate of interest. Now, the communication will come. The formal discussions are over,” the minister said.
“We will immediately issue the notification and credit the rate of interest to over four crore subscribers.”
The Employees’ Provident Fund Organisation trustees had approved 8.65 per cent rate on EPF in December last year.
The Finance Ministry has been nudging the Labour Ministry to lower the EPF rate for aligning it with the rates of small savings schemes like PPF.
As per the practice, the board’s decision is concurred by the Finance Ministry after evaluating whether the EPFO would be able to provide the rate approved by trustees through its own income or not.
Once the Finance Ministry ratifies the rate of interest approved by the CBT, it is credited to the account of EPFO members for that particular financial year.
The Finance Ministry had last year also decided to lower the EPF interest rate of 8.8 percent for 2015-16, decided by the CBT, to 8.7 per cent. The decision had drawn flak from all quarters forcing the government to uphold 8.8 per cent.
The Finance Ministry has been asking the Labour Ministry to rationalise the EPF interest rate in view of lowering of returns on various administered saving schemes like PPF.
The government generally ratifies the rate of return approved by the CBT because the EPFO is an autonomous body and provides interest on EPF deposits from its own income.